Employees liable for stealing trade secrets

by Hannah Norton16 Apr 2015
Employees have an obligation not to disclose confidential company information even if it’s not stipulated in their contract, a recent employment law case reiterates.

In a judgment released this week, Judicial Commissioner Edmund Leow discussed employee obligations of confidence, after finding two former employees of a Singapore company liable for misusing confidential information.

“Even without an express contractual term in an employment contract, an obligation against the use or disclosure of confidential information will be implied for employees,” he said in his judgment.”

The case: Tempcool Engineering v Chong Vincent and others

The case involved two former employees of refrigeration systems company Tempcool, who obtained trade secrets such as design drawings and other documents, with the intention of using them in a competing business.

The first employee, Woon Wee Seng, resigned from Tempcool in February 2013 - after almost three decades with the company - to join company U.B. Zanotti System Pte Ltd (UBZ), of which he was a director and 50% shareholder.

The second employee, Vincent Chong, joined Tempcool in June 2012 after studying at a polytechnic and had worked for eight to nine months as Seng’s colleague before Seng’s departure.

On 2 May 2013, a Tempcool employee discovered on Chong’s iPad copies of Tempcool drawings for three projects, as well as pricing information and filing labels, which had been sent to Woon with the intention  of using them at UBZ.

Judicial Commissioner Leow found Chong had misused Tempcool’s confidential information by sending Seng the drawings.

He also found that Seng had knowingly procured Chong’s breaches of confidence, and therefore was also liable for misusing confidential information.

As part of ascertaining whether the documents were sufficiently valuable to be confidential, Leow considered the fact they were “products of professional effort and labour, and were of some value”.

Leow also looked at whether the Chong and Seng were liable for misusing Tempcool’s pricing information and filing lables, whether Chong and Seng had breached their duty of good faith and fidelity, and whether they were liable for unlawful conspiracy.

He found they had misused the pricing information, but were not liable for the misuse of the filing labels. He found Chong, working as an employee, had breached his duty of good faith and fidelity, but Seng, as a former employee, had not. However, he observed Seng would have been liable for the tort of inducing breach of contract.

Leow ordered damages be assessed.

How to protect trade secrets
  • The Intellectual Property Office of Singapore has some tips on protecting confidential information, including:
  • Limit the number of people who can access such confidential information;
  • Have employees sign non-disclosure agreements, which provide that they have to maintain confidential specific information that is disclosed to them;
  • Ensure that any individuals who come into contact with the business or company, such as consultants and vendors, sign non-disclosure agreements; and
  • Keep a clear record of all business deals that may contain any confidential information.

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